ASIC calls for super funds to step up scam fight

The corporate regulator says the superannuation sector is failing to detect its members being scammed, and that it is time for a review of scam and fraud controls.

ASIC commissioner Simone Constant. Picture: John Feder

The corporate regulator has read the riot act to the superannuation sector over scam handling, saying funds were doing too little to stop the financial crime and calling for an industry-wide assessment of prevention measures.

In a letter sent to superannuation trustees on Wednesday, the Australian Securities & Investments Commission said the retirement sector was not taking scams seriously.

ASIC commissioner Simone Constant said the regulator’s review of the superannuation sector’s scam handling had revealed many funds had shortcomings in scam detection, with some operators reporting “that they had not seen many, if any instances of scams impacting their members”.

Australians lost at least $233.8m on scams between April to June last year, according to National Anti-Scam Centre data.

In her letter to the super sector, Ms Constant said ASIC was concerned that funds were focusing too much on “fraud” detection but had failed to act on scams or scammers seeking to fool customers into cashing out their retirement savings.

She said ASIC’s review had found that super funds “focused on confirming that the person requesting a transfer was the member rather than looking for flags to indicate that the member may have been tricked”.

“We found that trustees did not have sufficient oversight of their external administrators’ anti-scam and anti-fraud practices,” Ms Constant said.

“In our engagement with trustees, they frequently referred in general terms to their administrators’ systems and processes, but sometimes lacked knowledge about key details.”

Ms Constant questioned whether super funds were missing how many of their members were being scammed.

She said the super funds had to avoid becoming a “soft target” amid the push by the broader ­financial sector to step up to fight scams, as the Albanese government prepares to legislate a series of mandatory codes of conduct to stop scourge.

The government has proposed a series of codes for the banking, telecommunications and social media sectors that would require them to do more to stop scams or face having to repay losses.

These laws are sitting in the Senate, with the Greens saying they will not back the proposal.

Ms Constant told the superannuation trustees ASIC would ­request they commission a preliminary assessment of anti-scam and anti-fraud measures, including a review of the work of their external administrators, “to identify areas for improvement”.

ASIC chair Joe Longo said super funds could not avoid responsibility for functions the sector had outsourced to other operators, amid the spectre of court action filed by the regulator against Cbus over failures to pay claims.

Cbus argued its external provider Link was central to its failures to pay claims.

Ms Constant said the super funds should also address the baseline of ASIC’s expectations set out to the banking sector, as well as the weaknesses and risks identified in her letter.

She also raised the responsibilities of the funds under the Financial Accountability Regime, cautioning the super trustees should “consider whether it is appropriate to allocate the scam (and fraud) management key function to one of your accountable persons”.

Originally published as ASIC calls for super funds to step up scam fight